CHAPTER 1 — GENERAL PRINCIPLES

Article 1 This Law is formulated for the purposes of protecting the legitimate rights and interests of patentees, encouraging invention, promoting application of inventions, raising innovation ability and promoting scientific and technological advancements and economic and social development.

Article 2 Inventions referred to in this Law shall mean inventions, utility models and designs.

An invention shall mean a new technological scheme proposed for a product, a process or the improvement thereof.

A utility model shall mean an applicable and practical new technological scheme proposed for the shape or structure of a product or a combination thereof.

A design shall mean a new design proposed for the shape or pattern of a product or a combination thereof and a combination of colours and shape or pattern which is full of aesthetic sense and is suitable for industrial application.

Article 3 The patent administrative authorities of the State Council shall be responsible for administration of patent matters nationwide, accept and examine patent applications on a unified basis and grant patent rights pursuant to the law.

The authorities for administration of patent matters of the People's Governments of provinces, autonomous regions and municipalities directly under the central government shall be responsible for patent administration matters within their respective administrative regions.

Article 4 Where the invention in a patent application involves national security or significant interests and is required to be kept confidential, the matter shall be dealt with pursuant to the relevant provisions of the State.

Article 5 For inventions which violate the laws and social ethics or harm public interest, patent rights shall not be granted.

For inventions which are completed by reliance on genetic resources obtained or used in violation of the provisions of laws and administrative regulations, patent rights shall not be granted.

Article 6 An employee invention is an invention completed by an employee in the course of performing duties for the employer or completed by substantially using the material and technical conditions of the employer. The employer shall have the rights to apply for patent for an employee invention; upon approval of the application, the employer shall be the patentee.

The inventor or designer shall have the rights to apply for patent for a non-employee invention; upon approval of the application, the inventor or designer shall be the patentee.

Where the employer and the inventor or designer have entered into a contract for an invention completed using the material and technical conditions of the employer which stipulates the party who has the rights to apply for patent and the ownership of patent rights, such agreement shall prevail.

Article 7 No organisation or individual shall inhibit a patent application by the inventor or designer for a non-employee invention.

Article 8 In the event that two or more organisations or individuals cooperated in the completion of an invention or an organisation or individual has been entrusted by another organisation or individual to complete an invention, unless otherwise agreed, the organisation(s) or individual(s) who has/have completed or jointly completed the invention shall have the rights to apply for patent for the invention; upon approval of the application, the applicant organisation or individual shall be the patentee.

Article 9 Only one patent right shall be granted for the same invention. However, where the same applicant also applies for patent for utility model for the same invention on the same day as the application for patent for the invention, and the utility model patent rights granted first have not been terminated yet and the applicant declares that he/she waives such utility model patent rights, the patent rights for the invention may be granted.

Where two or more applicants have made their respective application for patent for the same invention, the patent rights shall be granted to the first applicant who has made the application.

Article 10 The rights to apply for patent and patent rights may be transferred.

A Chinese organisation or individual proposing to transfer the rights to apply for patent or transfer patent rights to a foreign individual, foreign enterprise or any other foreign organisation shall process the formalities pursuant to the provisions of the relevant laws and administrative regulations.

The parties concerned shall enter into a contract in writing for transfer of the rights to apply for patent or transfer of patent rights, and process registration formalities with the patent administrative authorities of the State Council, and the patent administrative authorities of the State Council shall make a public announcement. The transfer of the rights to apply for patent or transfer of patent rights shall be effective from the date of registration.

Article 11 Following the grant of patent rights for an invention or a utility model, unless otherwise stipulated in this Law, no organisation or individual shall implement the patent without licensing from the patentee, ie shall not manufacture, use, offer to sell, sell or import such patented products for manufacturing and business purposes, or use the patented method and use, offer to sell, sell or import products obtained directly according to the patented method.

Following the grant of design patent rights, no organisation or individual shall implement the patent without licensing from the patentee, ie shall not manufacture, offer to sell, sell or import the design patented products for manufacturing and business purposes.

Article 12 An organisation or individual proposing to implement the patent of others shall enter into a licensing contract with the patentee for implementation, and pay royalties to the patentee. A licensee shall have no right to allow any organisation or individual that is not stipulated in the contract to implement such patent.

Article 13 Upon announcement of a patent application for invention, an applicant may request the organisation or individual that implements the invention to pay the appropriate expenses.

Article 14 For an invention patent of a State-owned enterprise or institution which has significant bearing on national interest or public interest, the relevant administrative authorities of the State Council and the People's Government of the province, autonomous region or municipality directly under the central government may, upon obtaining approval of the State Council, decide to promote application of the invention patent within the approved scope, and permit implementation by designated organisation(s), and the implementing organisation(s) shall pay royalties to the patentee pursuant to the provisions of the State.

Article 15 Where the co-applicants for patent or co-patentees of patent rights have an agreement in exercising rights, such agreement shall prevail. Where there is no agreement, the co-patentees may implement the patent solely or license others to implement the patent through a general licensing scheme; where others are licensed to implement the patent, the royalties collected shall be distributed among the co-patentees.

Except for the circumstances stipulated in the preceding paragraph, the exercise of co-owned rights to apply for patent or co-owned patent rights shall be consented by all the co-patentees.

Article 16 The organisation which has been granted patent rights shall reward the inventor or designer of an employee invention; upon implementation of the patent for the invention, the inventor or designer shall be given reasonable remuneration according to the scope of promoted applications and economic benefits received.

Article 17 An inventor or a designer shall have the right to state that he/she is the inventor or designer in the patent documents.

A patentee shall have the right to affix patent marking on the patented products or the packaging of such products.

Article 18 Where a foreigner, foreign enterprise or any other foreign organisation that does not have a permanent address or business address in China makes a patent application in China, the application shall be processed in accordance with the agreement entered into between the home country and China or an international treaty participated by both the home country and China or the reciprocity principle, and pursuant to this Law.

Article 19 A foreigner, foreign enterprise or any other foreign organisation that does not have a permanent address or business address in China shall entrust a patent agency established pursuant to the law to apply for patent and handle other patent matters in China.

Chinese organisations or individuals may entrust a patent agency established pursuant to the law to apply for patent and handle other patent matters in China.

Patent agencies shall comply with the laws and administrative regulations and handle patent applications or other patent matters as entrusted by their clients; patent agencies shall have the obligation to keep contents of inventions of a client confidential, except where the patent application has been announced or promulgated. The detailed administrative measures for patent agencies shall be stipulated by the State Council.

Article 20 Any organisation or individual applying for patent in a foreign country for an invention or a utility model completed in China shall first notify the patent administrative authorities of the State Council for confidential examination. The procedures, duration, etc for confidential examination shall comply with the provisions of the State Council.

Chinese organisations or individuals may make international patent applications pursuant to the relevant international treaties participated by the People's Republic of China. An applicant for international patent application shall comply with the provisions of the preceding paragraph.

The patent administrative authorities of the State Council shall handle international patent applications pursuant to the relevant international treaties participated by the People's Republic of China, this Law and the relevant provisions of the State Council.

Where an application for patent for an invention or a utility model submitted in a foreign country violates the provisions of the first paragraph of this Article and an application for patent is submitted in China, patent rights shall not be granted.

Article 21 The patent administrative authorities of the State Council and their patent review committee shall handle the relevant patent applications and requests pursuant to the law and in accordance with the principles of objectivity, fairness, accuracy and timeliness.

The patent administrative authorities of the State Council shall announce patent information in a complete, accurate and timely manner and publish patent gazettes on a regular basis.

Prior to announcement or promulgation of patent applications, the staff and relevant personnel of the patent administrative authorities of the State Council shall have the obligation to keep the contents of patent applications confidential.

CHAPTER 2 — CRITERIA FOR GRANT OF PATENT RIGHTS

Article 22 Inventions and utility models in which patent rights are granted shall possess novelty, creativity and practicality.

Novelty shall mean that an invention or a utility model does not fall under the existing technologies; and no organisation or individual has submitted an application to the patent administrative authorities of the State Council for an identical invention or utility model prior to the date of the patent application, and record shall be made in the announced patent application documents or promulgated patent documents after the date of the patent application.

Creativity shall mean that, when compared to the existing technologies, an invention possesses substantive characteristics which are distinctive and eminent improvements or a utility model has substantive characteristics and improvements.

Practicality shall mean that an invention or a utility model can be manufactured or used and can generate positive effects.

Existing technologies referred to in this Law shall mean technologies well known in the public domain in China or overseas prior to the date of the patent application.

Article 23 Designs in which patent rights are granted shall not fall under the existing designs; and no organisation or individual has submitted an application to the patent administrative authorities of the State Council for an identical design prior to the date of the patent application, and record shall be made in the promulgated patent documents after the date of the patent application.

A design in which patent rights are granted, when compared to the existing designs or a combination of characteristics of the existing designs, shall possess a clear distinction.

A design in which patent rights are granted shall not have conflict with the legitimate rights obtained by others prior to the date of the patent application.

Existing designs referred to in this Law shall mean designs well known in the public domain in China or overseas prior to the date of the patent application.

Article 24 Where an invention for patent application encounters any of the following circumstances within six months before the date of the patent application, the novelty factor shall not be affected:

(1) the invention was first shown in an international exhibition organised or recognised by the Chinese Government;

(2) the invention was first published at a stipulated academic or technological conference; or

(3) the contents of the invention were divulged by others without the consent of the applicant.

Article 25 Patent rights shall not be granted to the following items:

(1) scientific discovery;

(2) rules and methods of intellectual activities;

(3) diagnosis and treatment methods of illnesses;

(4) animal and plant varieties;

(5) substances obtained through nuclear transformation method; and

(6) a design which has major marking effect on the patterns or colours of graphic print products or a combination of both patterns and colours.

Patent rights may be granted pursuant to the provisions of this Law to the manufacturing methods for products listed in item (4) of the preceding paragraph.

CHAPTER 3 — PATENT APPLICATIONS

Article 26 Documents such as a letter of request, the manual and its summary and a letter of claim, etc shall be submitted for a patent application for an invention or a utility model.

The letter of request shall state the description of the invention or utility model, the name of the inventor, the name and address of the applicant and other matters.

The manual shall provide a clear and complete explanation of the invention or utility model to the extent which can be materialised by technical personnel in the relevant technological field; diagrams shall be attached where necessary. The summary shall include a brief explanation of the technical features of the invention or utility model.

The letter of claim shall be based on the manual and shall stipulate the scope of patent protection sought clearly and briefly.

For an invention which relies on genetic resources for completion, the applicant shall state the direct source and original source of such genetic resources in the patent application documents; where the applicant is unable to state the original source, the reason shall be stated.

Article 27 Documents such as a letter of request, pictures or photographs of the design and a brief explanation of the design, etc shall be submitted for a design patent application.

The relevant pictures or photographs submitted by the applicant shall clearly show the design of the products in which patent protection is sought.

Article 28 The date of patent application shall be the date of receipt of the patent application documents by the patent administrative authorities of the State Council. Where the application documents are submitted by post, the date of patent application shall be the date of postmark for sent mails.

Article 29 Where an applicant who has made a first-time patent application for an invention or a utility model in a foreign country or a first-time patent application for a design in a foreign country submits a patent application for the same subject in China within 12 months from the date of the first-time patent application for the invention or utility model or within six months from the date of the first-time patent application for the design, the applicant may enjoy pre-emption rights in accordance with the agreement entered into between the foreign country and China or the international treaty participated by both the foreign country and China or in accordance with the principle of mutual recognition of pre-emption rights.

Where an applicant who has made a first-time patent application for an invention or a utility model in China submits a patent application for the same subject to the patent administrative authorities of the State Council within 12 months from the date of the first-time patent application, the applicant may enjoy pre-emption rights.

Article 30 An applicant requesting for pre-emption rights shall submit a written declaration at the time of application, and submit the duplicate copy of the patent application documents for the first-time patent application within three months; where the written declaration is not submitted or the duplicate copy of the patent application documents is not submitted within the stipulated period, it shall be deemed that the applicant has not requested for pre-emption rights.

Article 31 A patent application for an invention or a utility model shall be limited to one invention or one utility model. One application may be submitted for two or more inventions or utility models which fall under an overall invention concept.

A design patent application shall be limited to one design. One application may be submitted for two or more similar designs for the same product or two or more designs used on the same type of products which are sold or used as a package.

Article 32 An applicant may withdraw his/her patent application at any time before the patent rights are granted.

Article 33 An applicant may amend his/her patent application documents, provided that the amendments to the patent application documents for an invention and a utility model shall not exceed the scope stated in the original manual and letter of claim, and the amendments to the patent application documents for a design shall not exceed the scope illustrated in the original pictures or photographs.

CHAPTER 4 — EXAMINATION AND APPROVAL OF PATENT APPLICATIONS

Article 34 After the patent administrative authorities of the State Council have received a patent application for an invention and the application is found to be in compliance with the requirements of this Law in the preliminary examination, an announcement shall be made once the period of 18 months from the date of application has expired. The patent administrative authorities of the State Council may announce the application earlier upon request by the applicant.

Article 35 The patent administrative authorities of the State Council may, within three years from the date of patent application for an invention, conduct substantial examination of the application upon request by the applicant at any time; where an applicant failed to request for substantial examination within the stipulated period without a valid reason, the application shall be deemed as withdrawn.

The patent administrative authorities of the State Council may, when it deems necessary, conduct substantial examination of a patent application for an invention voluntarily.

Article 36 An applicant for patent for an invention shall, at the time of request for substantial examination, submit the reference materials which are related to the invention before the date of application.

Where a patent application for an invention was previously made in a foreign country, the patent administrative authorities of the State Council may require the applicant to submit within a stipulated period the search materials obtained by the foreign country for examination of the application or examination outcome materials; where the applicant failed to submit the materials within the stipulated period without a valid reason, the application shall be deemed as withdrawn.

Article 37 After the patent administrative authorities of the State Council have conducted substantial examination of a patent application for an invention and the application is found not to be in compliance with the provisions of this Law, the applicant shall be notified and asked to state his/her opinions within a stipulated period or make amendments to the application; where the applicant failed to reply within the stipulated period without a valid reason, the application shall be deemed as withdrawn.

Article 38 Where the patent administrative authorities of the State Council still finds the application not to be in compliance with the provisions of this Law after the applicant has stated his/her opinions or made amendments to the patent application for an invention, the application shall be rejected.

Article 39 Where a patent application for an invention has undergone substantial examination and no reason for rejection is found, the patent administrative authorities of the State Council shall decide to grant patent rights to the invention, issue a patent certificate for the invention, and concurrently carry out registration and announcement. The patent rights for an invention shall be effective from the date of announcement.

Article 40 Where a patent application for a utility model or a design has undergone preliminary examination and no reason for rejection is found, the patent administrative authorities of the State Council shall decide to grant patent rights to the utility model or the design, issue the corresponding patent certificate, and concurrently carry out registration and announcement. The patent rights for a utility model or a design shall be effective from the date of announcement.

Article 41 The patent administrative authorities of the State Council shall establish a patent review committee. Where an applicant for patent disagrees with the decision of the patent administrative authorities of the State Council to reject his/her application, he/she may submit a request for review to the patent review committee within three months from the date of receipt of notification. The patent review committee shall make a decision after review and notify the applicant for patent.

Where the applicant for patent disagrees with the review decision of the patent review committee, he/she may file a lawsuit with a People's Court within three months from the date of receipt of notification.

CHAPTER 5 — DURATION, TERMINATION AND INVALIDITY OF PATENT RIGHTS

Article 42 The validity period of patent rights for an invention shall be 20 years, the validity period of patent rights for a utility model or a design shall be 10 years, the validity period shall commence from the date of application.

Article 43 A patentee shall commence payment of annual fee for a patent from the year in which patent rights were granted.

Article 44 Under any of the following circumstances, the patent rights shall terminate before expiry of the validity period:

(1) where the patentee failed to pay annual fee pursuant to the provisions; or

(2) where the patentee has declared in writing on waiving the patent rights.

Where the patent rights have terminated before expiry of the validity period, the patent administrative authorities of the State Council shall carry out registration and announcement.

Article 45 With effect from the date of announcement by the patent administrative authorities of the State Council on grant of patent rights, any organisation or individual that holds the view that the grant of such patent rights does not comply with the relevant provisions of this Law may request the patent review committee to declare that such patent rights are invalid.

Article 46 The patent review committee shall promptly examine the request for declaring the patent rights to be invalid and notify the applicant and the patentee of the decision made. The patent administrative authorities of the State Council shall carry out registration and announcement for a decision to declare the patent rights to be invalid.

The applicant or the patentee who disagrees with the decision of the patent review committee on declaring the patent rights to be invalid or upholding the patent rights may file a lawsuit with a People's Court within three months from the date of receipt of notification. The People's Court shall notify the counterparty in the procedures for request to declare the patent rights to be invalid to participate in the lawsuit as a third party.

Article 47 Patent rights which are declared to be invalid shall be deemed to be non-existent.

A decision on declaring the patent rights to be invalid shall not have retrospective effect on a ruling or written mediation on patent infringement made and enforced by a People's Court before the patent rights were declared to be invalid, a decision on handling patent infringement dispute which has been performed or mandatorily enforced or a licensing contract for patent implementation or a contract for transfer of patent rights which has been performed. However, damages incurred by others as a result of the patentee's malice shall be compensated.

Where a non-refund of patent infringement compensation, royalties and transfer fee for patent rights pursuant to the provisions of the preceding paragraph is evidently in violation of the principle of fairness, all or part of the sum shall be refunded.

CHAPTER 6 — MANDATORY LICENSING FOR PATENT IMPLEMENTATION

Article 48 Under any of the following circumstances, the patent administrative authorities of the State Council may, pursuant to an application by an organisation or individual equipped with the conditions for implementation, grant mandatory licensing for implementation of the patent of an invention or a utility model:

(1) where a patentee has not implemented or fully implemented the patent without a valid reason after a three-year period has lapsed since the date of grant of patent rights or after a four-year period has lapsed since the date of patent application; or

(2) where the acts of exercising patent rights by a patentee have been determined as monopolistic acts pursuant to the law, and the mandatory licensing is granted to eliminate or reduce the adverse impact on competition caused by such acts.

Article 49 During a national emergency situation or under exceptional circumstances, or for the purpose of public interest, the patent administrative authorities of the State Council may grant mandatory licensing for implementation of the patent of an invention or a utility model.

Article 50 For the purpose of public health, the patent administrative authorities of the State Council may grant mandatory licensing for patented drugs manufactured and exported to countries or regions which comply with the provisions of the relevant international treaty participated by the People's Republic of China.

Article 51 Where a patented invention or utility model possesses significant technological advancement with eminent economic significance when compared with a previously patented invention or utility model, and the implementation of such patented invention or utility model relies on the implementation of the previous invention or utility model, the patent administrative authorities of the State Council may, pursuant to an application by the patentee of the latter invention or utility model, grant mandatory licensing for implementation of the previous invention or utility model.

Under the circumstances where mandatory licensing is granted for implementation pursuant to the provisions of the preceding paragraph, the patent administrative authorities of the State Council may also, pursuant to an application by the patentee of the previous invention or utility model, grant mandatory licensing for implementation of the latter invention or utility model.

Article 52 Where the invention involved in mandatory licensing falls under semiconductor technology, the implementation thereof shall be restricted to the purpose of public interest and the circumstances stipulated in item (2) of Article 48 of this Law.

Article 53 Except for mandatory licensing granted pursuant to the provisions of item (2) of Article 48 and Article 50 of this Law, the implementation of mandatory licensing shall mainly satisfy the purpose of supply to domestic market.

Article 54 An organisation or individual applying for mandatory licensing pursuant to the provisions of item (1) of Article 48 and Article 51 of this Law shall provide evidence to prove that it has presented reasonable conditions to request the patentee to license the implementation of patent to the organisation or individual but the patentee does not grant licensing to the organisation or individual within a reasonable period.

Article 55 The patent administrative authorities of the State Council shall, upon making a decision to grant mandatory licensing for implementation, notify the patentee promptly and carry out registration and announcement.

A decision to grant mandatory licensing for implementation shall stipulate the scope and timing of implementation pursuant to the reason for mandatory licensing. When the reason for mandatory licensing is eliminated and will not occur again, the patent administrative authorities of the State Council shall, pursuant to a request of the patentee, decide on termination of mandatory licensing for implementation after examination.

Article 56 An organisation or individual in which mandatory licensing for implementation has been granted shall not have exclusive implementation rights and shall have no right to allow implementation by others.

Article 57 An organisation or individual in which mandatory licensing for implementation has been granted shall pay reasonable royalties to the patentee; where the payment of royalties is to be made pursuant to the provisions of the relevant international treaty participated by the People's Republic of China, the amount shall be negotiated between both parties; where both parties cannot agree on the amount, the amount shall be decided by the patent administrative authorities of the State Council.

Article 58 Where a patentee disagrees with the decision of the patent administrative authorities of the State Council on mandatory licensing for implementation or where the patentee and the organisation or individual in which mandatory licensing for implementation has been granted disagree with the amount of royalties decided by the patent administrative authorities of the State Council for mandatory licensing for implementation, he/she/it may file a lawsuit with a People's Court within three months from the date of receipt of notification.

CHAPTER 7 — PROTECTION OF PATENT RIGHTS

Article 59 The scope of protection of patent rights for an invention or a utility model shall be based on the contents of the letter of claim; the manual and attached pictures may be used to explain the contents of the letter of claim.

The scope of protection of patent rights for a design shall be based on the design of the products illustrated in the pictures or photographs; the brief explanation of the design may be used to explain the design of the products illustrated in the pictures or photographs.

Article 60 Implementation of a patent without licensing of the patentee shall be an infringement of patent rights; a dispute thereof shall be negotiated and resolved by the parties concerned; where the parties concerned are not willing to negotiate or the negotiation is unsuccessful, the patentee or a stakeholder may file a lawsuit with a People's Court, or may request the authorities for administration of patent matters to handle the matter. Where the authorities for administration of patent matters conclude that there is a patent infringement when handling the matter, the infringer may be ordered to stop the infringement act forthwith; where the party concerned disagrees, he/she may file a lawsuit with a People's Court pursuant to the Law of Administrative Litigation of the People's Republic of China within 15 days from the date of receipt of notification pertaining to handling of the matter; where the infringer failed to file a lawsuit within the stipulated period and does not stop the infringement act, the authorities for administration of patent matters may apply to a People's Court for mandatory enforcement. The authorities for administration of patent matters which handle the matter may, pursuant to a request of the parties concerned, mediate on the compensation amount in respect of infringement of patent rights; where the mediation is unsuccessful, the parties concerned may file a lawsuit with a People's Court pursuant to the Civil Procedure Law of the People's Republic of China.

Article 61 Where a patent infringement dispute involves a patented invention for manufacturing method of a new product, organisations or individuals manufacturing the same product shall show proof to prove that their product manufacturing method differs from the patented method.

Where a patent infringement dispute involves a patented utility model or patented design, a People's Court or the authorities for administration of patent matters may require the patentee or stakeholder(s) to provide a patent rights evaluation report made by the patent administrative authorities of the State Council after carrying out searches, analysis and evaluation of the relevant utility model or design as proof for trial or handling of the patent infringement dispute.

Article 62 In a patent infringement dispute where the accused infringer shows proof to prove that his/her technology or design implemented falls under the existing technologies or existing designs, it shall be deemed not to have infringed patent rights.

Article 63 In case of counterfeiting patent, the offender shall, in addition to bearing civil liability pursuant to the law, be ordered by the authorities for administration of patent matters to make correction; a public announcement shall be made; illegal income shall be confiscated, and a fine of not more than four times the amount of the illegal income may also be imposed; where there is no illegal income, a fine of not more than RMB200,000 may be imposed; where the case constitutes a criminal offence, criminal liability shall be pursued in accordance with the law.

Article 64 The authorities for administration of patent matters may, according to evidence obtained, question the relevant parties concerned when investigating into the alleged counterfeiting of patent, and investigate the matters relating to the alleged illegal act; conduct on-site inspection at the premises of the parties concerned where the illegal act is alleged to take place; inspect and make copies of the contracts, invoices, accounts books and other relevant materials relating to the alleged illegal act; inspect products relating to the alleged illegal act, and may seal up or seize products which are proved to be counterfeiting patent.

When the authorities for administration of patent matters exercise the official powers stipulated in the preceding paragraph pursuant to the law, the parties concerned shall render assistance and cooperation and shall not refuse or hinder.

Article 65 The compensation amount for infringement of patent rights shall be determined according to the actual losses suffered by the holder of patent rights due to the infringement; where it is difficult to determine the actual losses, the compensation amount shall be determined according to the gains derived by the infringer from the infringement. Where it is difficult to determine the losses of the holder of patent rights or the gains derived by the infringer, the compensation amount shall be determined reasonably according to a multiple of the royalties of such patent. The compensation amount shall also include the reasonable expenses incurred by the holder of patent rights in the course of stopping the infringement.

Where it is difficult to determine the losses of the holder of patent rights, the gains derived by the infringer and the royalties of the patent, a People's Court may determine a compensation amount ranging from RMB10,000 to RMB1 million according to the type of patent rights, the nature of infringement and the circumstances, etc.

Article 66 Where the patentee or stakeholder can show proof to prove that others are implementing or will be implementing an infringement of patent rights, and his/her legitimate rights and interests will suffer from irreparable damages if such infringement or impending infringement is not stopped promptly, the patentee or stakeholder may, prior to filing a lawsuit, apply to a People's Court to adopt measures to order that the relevant acts be stopped.

An applicant shall provide guarantee when making an application; where a guarantee is not provided, the application shall be rejected.

The People's Court shall make a ruling within 48 hours from the time of acceptance of the application; where there is a need for extension of time under special circumstances, an extension of 48 hours may be granted. Where the People's Court has ruled that the relevant acts are ordered to be stopped, such ruling shall be forthwith enforced. A party concerned who disagrees with the ruling may apply for one review only; the ruling shall continue to be enforced during the review period.

Where the applicant failed to file a lawsuit within 15 days from the date on which the People's Court adopts measures to order that the relevant acts be stopped, the People's Court shall lift the measures.

Where there is an error in the application, the applicant shall compensate the counterparty for the losses incurred due to stopping of the relevant acts.

Article 67 For the purpose of stopping a patent infringement act and under the circumstances that evidence may be lost or become irrecoverable in the future, the patentee or stakeholder may, prior to filing a lawsuit, apply to a People's Court for preservation of evidence.

The People's Court adopting preservation measures may order the applicant to provide guarantee; where the applicant does not provide guarantee, the application shall be rejected.

The People's Court shall make a ruling within 48 hours from the time of acceptance of the application; where the People's Court has ruled that preservation measures be adopted, the ruling shall be forthwith enforced.

Where the applicant failed to file a lawsuit within 15 days from the date on which the People's Court adopts preservation measures, the People's Court shall lift the measures.

Article 68 The limitation of actions for infringement of patent rights shall be two years, commencing from the date on which the patentee or stakeholder becomes or should become aware of the infringement.

Where the appropriate royalties were not paid for using an invention during the period from the announcement of a patent application for the invention to the grant of patent rights, the limitation of actions for the patentee's royalties claim shall be two years, commencing from the date on which the patentee becomes or should become aware of use of his/her invention by others, however, where the patentee becomes or should become aware prior to the date of grant of patent rights, the limitation of actions shall commence from the date of grant of patent rights.

Article 69 The following circumstances shall not be deemed as infringement of patent rights:

(1) where the patented products or products obtained directly pursuant to the patented method are sold by the patentee or organisations or individuals licensed by the patentee before the use, offer for sale, sale and importation of such products;

(2) where identical products were manufactured or the same method was used before the date of patent application or where the requisite preparations for manufacturing or use were in place before the date of patent application, and the manufacturing or use continues only within the original scope;

(3) where the relevant patent is used in the device and equipment of foreign transportation vehicles which temporarily pass through China's territorial land, territorial waters and airspace for the needs of the transportation vehicles according to an agreement entered into between their home country and China or an international treaty participated by both their home country and China or pursuant to the principle of mutual benefits;

(4) where the relevant patent is used specifically for scientific research and experiment; and

(5) manufacturing, use or importation of patented drugs or patented medical devices for the purpose of providing information required for administrative examination and approval, and manufacturing or importation of patented drugs or patented medical devices specifically for them.

Article 70 Where an uninformed party which, for the purpose of manufacturing and business, uses, offers to sell or sells products of patent infringement which were manufactured and sold without licensing by the patentee can prove that such products are legitimately sourced, he/she shall not be liable for compensation.

Article 71 Officials who apply for patent in a foreign country and divulge State secrets in violation of the provisions of Article 20 of this Law shall be subject to administrative punishment meted out by their unit or the higher-level authorities; where the case constitutes a criminal offence, criminal liability shall be pursued in accordance with the law.

Article 72 Officials who seize an inventor or designer's right to apply for patent for a non-employee invention and other rights and interests stipulated in this Law shall be subject to administrative punishment meted out by their unit or the higher-level authorities.

Article 73 The authorities for administration of patent matters shall not participate in business activities such as promoting patented products to the public, etc.

The authorities for administration of patent matters which have violated the provisions of the preceding paragraph shall be ordered by their higher-level authorities or the supervision authorities to make correction and eliminate impact; illegal income shall be confiscated; where the case is serious, the person(s)-in-charge who is/are directly accountable and other directly accountable personnel shall be subject to administrative punishment pursuant to the law.

Article 74 Where State officials engaging in patent administration and other relevant State officials are guilty of practising dereliction of duty, abusing official powers and making corruption and where the case constitutes a criminal offence, criminal liability shall be pursued in accordance with the law; where the case does not constitute a criminal offence, administrative punishment shall be meted out pursuant to the law.

CHAPTER 8 — SUPPLEMENTARY PROVISIONS

Article 75 Persons applying for patent and processing other formalities with the patent administrative authorities of the State Council shall pay fees pursuant to the provisions.

Article 76 This Law shall be effective 1 April 1985.